Senator WATSON (5:06 PM)
—The Workplace Relations Amendment (Transition to Forward with Fairness) Bill 2008 is really about the ALP delivering on its promise in the lead-up to the 2007 election which had the essential feature of abolishing AWAs. As Deputy Chairman of the Senate Standing Committee on Education, Employment and Workplace Relations, I take this opportunity to thank all those groups who prepared submissions in such a short time, and I wish to assure them that I have read each of their submissions. They were incredibly helpful in analysing the consequences of the legislation which is now before the parliament. There has been unnecessary haste in pushing this bill forward in the way the report had to be rushed in such a tight time frame. I would also like to thank the committee secretariat for the incredible job that they did, working throughout the weekend to meet the very unrealistic deadlines that were put on the committee members.

I would like to point out that it was the opposition that believed it was absolutely essential that the far-reaching consequences of this bill and its submissions and all those sorts of things be looked at very, very thoroughly, including the bad drafting. I must say that we are not opposing the passage of this bill—there are certain features that have merit—but, unfortunately, some of the features that have merit are, in terms of their implementation, going to cause some difficulty. Generally senators do approve this bill, particularly those measures which strengthen the no disadvantage provisions to ensure fair bargaining between employers and employees, because we accept that there are a lot of workers and employers for whom the award is a necessary benchmark to ensure fairness, and in any negotiations between employers and employees it is absolutely essential that it is underwritten by a very strong no disadvantage test. I believe that industrial relations in this country can be fundamentally altered and can impose a check on what has been unparallel growth in this country, which we have enjoyed over the past 12 years. This is most important.

The central theme, I suppose, of the legislation has to be the elimination of AWAs. I must say that individual statutory agreements have been around since 1993 in Western Australia and they will be out under this bill. But there is nothing inherently wrong with such an agreement, as it provides the sort of flexibility that suits both employers and employees. I think that even in my own party, the Liberal Party, we acknowledge that there is merit in individual ability and personal decision making, and individual statutory agreements reflect that tradition. There is strong evidence that individual ISAs that are subject to a safety net—and that is the important feature—are an essential part of a modern industrial regime. I believe that the Labor Party’s dogged insistence that AWAs must be banned is a serious failure to recognise that, with appropriate safety nets, these agreements have an important part to play in the overall mix which is available to Australian workers and to Australian businesses. There is much that is good and positive that will be lost as a result of this short-sighted move.

At a time of increasing uncertainty in world markets, with the recession in the USA, with Arab, Chinese and Singaporean interests—even the Federal Reserve have had to move in to bail out some high profile US investment institutions, and there has been almost record mortgage defaults in that country—and given the impact if some of this spread across to Australia, the question of maintaining confidence in the system is very important. Therefore, in their minority report, members of the coalition were very concerned that no attempt had been made by the government—in fact, it was impossible for the employer groups to carry out an economic analysis of the consequences of these changes in terms of the impact on society and on social life.

The government have said that they are going to seek to have that degree of flexibility incorporated into a collective agreement, often known as a CA, but my colleagues were sceptical of the extent to which such flexibility clauses could really be usefully included in the modern award or under a CA arrangement. We remain doubtful as to whether these could deliver employers and employees the same sort of flexibility that they currently have under an individual statutory agreement. In fact, we found support from the Chamber of Commerce and Industry Western Australia, which said:

There are some means of individual agreement making we would be very satisfied with. It appears that the government is relying on award flexibility clauses that will be introduced as part of the government’s new system. These flexibility clauses are supposedly designed to enable the employer and the employee to negotiate a set of arrangements that might suit them—

and here is the crunch line—

but we don’t know what they look like.

That is where the uncertainty is, and I think Master Builders Australia and similar groups submitted similar ideas.

There was concern generally amongst the employer groups about the demise of individual agreements, particularly in Western Australia. They felt that it had served the industries over there particularly well; after all, they were introduced there in 1993 because of the considerable industrial unrest. The Australian Industry Group argued that employers and employees should have the right to pursue a form of agreement that best suits their needs, whether a collective agreement, an individual agreement, an agreement with a union or one directly with employees. Then we had the Australian Chamber of Commerce and Industry arguing that providing flexibility only within a collective agreement might reduce the options to some individuals, including flexibility to balance their work and family life.

The Rio Tinto group have 22 per cent of their workforce using AWAs. They say they have been using such agreements since the 1990s, that the agreements have met the needs of both the organisation and the employees and pay very well under those sorts of arrangements. We also found the National Farmers Federation supported the maintenance of AWAs as a legitimate alternative to awards, common-law agreements or collective agreements. So did local government associations, which were particularly significant. The Electrical and Communications Association from Queensland expressed their preference for the flexibility of the current system and being able to move away from a one-size-fits-all type of approach of a collective agreement. The Chamber of Commerce and Industry of Western Australia doubted the new legislation’s ability to provide flexibility within the government’s new award system. So there is a lot of hope and expectation. It is really a question of how and when it is going to be delivered. This is the problem that we are facing.

I mentioned earlier that there are certain omissions—areas that have been overlooked. From our side of politics, we have found some sympathy for a submission from the Telstra people through their body, the Communications, Electrical and Plumbing Union. They were concerned about the provisions of this bill which would have the effect of extinguishing certain of their redundancy provisions and, as a consequence of that, would diminish payout of redundancies. This is one of the many potential unintended consequences that could come out of this bill. And—surprise, surprise!—the low-paid workers’ plight was highlighted by the Textile, Clothing and Footwear Union. Fortunately, EEWR has indicated that they might like to introduce an amendment to pick up this concern. It has been worth while conducting this inquiry, because there are a lot of issues that have been put on the table that were not identified at that particular time.

A central feature of the bill is transitional arrangements. These are not going to be without problems, because they have a very limited lifetime. Some groups would like to see them extended; others feel that the delay in moving to a collective agreement will only give unions power to negotiate at a time when they may be more vulnerable. So the whole situation is fraught with challenges for industry. Industry is generally accepting the fact that this has been forced upon them and that there is no point in going against the tide. But we hope that in this report we can ensure that some greater degree of flexibility than is apparent at the present can come through. It is a challenging time for all.

Perhaps the biggest problem is going to be faced by some of the small businesses and small independent contractors. We had people such as the Master Plumbers’ Association of Queensland coming before the committee, who told the committee that individual statutory agreements had brought many small businesses into the industrial relations system for the first time. And that is very important. Ms Marcia Kuhne, from the Western Australian Chamber of Commerce and Industry, said:

The result is that both employers and employees will be affected because many employees also elect to be employed under individual arrangements under their own agreements. It suits many employees.

So we have a situation where a one-size-fits-all is going to cause enormous challenges for people. As I said, there is going to be a lot of confusion associated with these ITEAs, these transitional arrangements, because they can be entered into until 31 December 2009. Representatives appear to believe that there are various ways in which they may be continued indefinitely. I think that remains to be seen. Others were concerned that the two-year life would be inadequate. Perhaps the majority of people suggested that there was no uniformity—no unanimous view—in terms of that particular approach.

In relation to the interim transitional arrangements, the other big problem was that employees who had left were unable to come back under an AWA and had to go onto an ITEA and, of course, that may be somewhat different to the AWA under which they had been working. The big question everybody asked was: ‘Why are you discriminating against these sorts of people?’ This is particularly so in the construction industry, where people are employed to build a dam, a factory or something and, when that ends, they probably move to another project, sometimes with another employer, and then within six months they are back again. That was a particular problem. Very few people were able to understand the rationale for excluding previous employers from the ITEA system, and I think that was indeed unfortunate.

The question of commencement dates—whether it is going to be on lodgement or when the AIRC has approved the new arrangement—created a lot of difficulties, because industry has to plan. The big difficulty, of course, is that the no disadvantage test has to be approved within these new ITEA arrangements, the record of approvals has not been good and there is substantial delay.

Award modernisation was an essential feature of this. While everybody supported the concept, we were rather sceptical that the tight time frames could be met. The big objection to awards was the inherent inflexibility, the cost of restoring awards. Awards are going to take an increasingly important role in the future and this is part of what I indicated about turning back the clock. Strangely enough, Professor Andrew Stewart—not always a friend of the Liberal Party—was a little bit scathing. He acknowledged that the request that it must not disadvantage either the employees or increase costs of employers is very difficult to achieve. In terms of modernisation, we had concerns from the unions about the ability for it to be done quickly or expeditiously. Paul Howes drew attention to the fact there are some 380 such federal awards and then there are state awards that have now been brought into the federal system. He complained of the complexity all round. Similar concerns were expressed by the Industry Group, the ECA et cetera.

State differentials create their own problems. That is a matter that obviously the government has got to come to grips with. It is a challenge that both parties recognise. It should be met in one way or another, but we must not underestimate the problems. When you are changing something as fundamental as the bill before us does, the coalition is concerned that there is the possibility that there is going to be some friction as a result of this because new negotiations will have to be entered into between employers and employees. We have had this long period of industrial harmony and industrial peace, and so there is a degree of trepidation which many employers are feeling as they enter into this new arrangement. That was certainly stated very clearly by Mr John Rothwell from Austal Ships who, prior to the AWAs in the 1990s, experienced a lot of disruption, concern and dislocation to his business. He is one who believes that he will have to move very quickly to the new arrangements to try to settle things down, but he is very wary about how this process could end up lifting the level of disputation.

Perhaps one of the best examples of the problems of one-size-fits-all came from local government. We received excellent evidence from the Local Government Association of Queensland. They gave us numerous examples of how this policy is not acceptable. The concept of an AWA—an individual workplace agreement—fitted very nicely into how they work in areas such as operating swimming pools and employing dog catchers or people who are called out late at night because cattle are on the road and so on. As they pointed out, local government is a 24/7 operation. They believed that individual agreements had to be an essential feature of their operation. (Time expired)